Reference no: EM132611141

ABC Company budgets the following amounts for its Service departments:

Stores $50,000

Computer services $85,000

The budget for the Production department is as follows:

Machining $100,000

Assembly $250,000

The Stores and Computer Services departments provide services to the Machining and Assembly departments as well as to each other in the following relationship:

                                        Stores                   Computer Services                    Machining                           Assembly

Stores                       --------                     20%                                    60%                                20%

Computer Services         15%                     ----------                                  30%                         55%

Required:

Question 1: Allocate the service departments cost to the production and service department using the reciprocal method.